Large ships may serve as collateral for loans

India is likely to allow large ships to be used as collateral for loans. This proposal is in line with plans to ease financing for the maritime industry.

"Lenders can accept large vessels as collateral... a decision on the minimum size of ships that can be offered will be taken in the next two-months," an official aware of the plan told ET. The average cargo handling capacity of Indian ships engaged in coastal trade stood at around 1,700 gross tonnage (GT) while those involved in overseas operations stood at 24,700 GT. The wide variation within these two categories has prompted extended deliberations within the government on where to draw the line. "Banks would prefer larger ships that are more valuable and can be traced easily to be offered for collateral," the official added.

According to the Maritime India Vision 2030, Indian shipping companies struggle to grow tonnage due to difficulties in accessing required finance. "Due to financial constraints, Indian shipowners are not able to order new ships to local shipyards," the vision document said.


In line with efforts to address these concerns, finance minister Nirmala Sitharaman proposed including large ships to the Infrastructure harmonised master list (HML) in budget 2025-26.

"This will make them eligible for benefits such as easier access to long-term financing and tax incentives. This will also attract private investment and enhance fleet modernisation," an official statement had said. Besides, the budget had also announced setting up a Maritime Development Fund (MDF) of ₹25,000 crore. This will directly benefit financing for ship acquisition. It aims at boosting Indian flagged ships' share in the global cargo volume up to 20% by 2047. By 2030, MDF is aiming at generating around ₹1.5 lakh crore investment in the shipping sector.

India is also eyeing development of new shipbuilding clusters of 1.0 to 1.2 million GT each on the public-private partnership (PPP) model.

The budget also announced a Shipbuilding Financial Assistance Policy (SBFAP) 2.0, aimed at providing direct financial subsidies to Indian shipyards. This was to be financed through budgetary support with a total outlay of ₹18,090 crore.